The battle for control of South African mining group Gold Fields turned nasty on Monday when predator Harmony accused its rival of attempting to ”corrupt” one of its employees to gain information.
In an astonishing statement, Harmony said it was ”outraged” at the depths to which Gold Fields was willing to stoop in its effort to fend off a takeover from its rival to create the world’s biggest gold miner.
”The head of security at Gold Fields, Mr Pine Pienaar, has offered a senior Harmony employee a contract to become an informer, specifically tasked to spy on Harmony’s tactics with regard to Harmony’s offer to Gold Fields. In a sworn affadavit, the Harmony employee has stated that he was encouraged to conduct these covert operations and to be paid under a false name,” it said.
The allegations were immediately dismissed by Gold Fields as nonsense. ”We deny this and Mr Pienaar is considering his legal position very closely,” said a spokesperson for Gold Fields in Johannesburg.
Another source close to Gold Fields argued that Harmony was misinterpreting legitimate talks between two security men about operational issues. This kind of discussion was quite normal in the gold sector, said the source who denied any reference was ever made to the Harmony takeover.
But Harmony continued to insist on Monday night that Pienaar specifically requested the Harmony employee ”collect any documentation lying around about the deal”.
The latest skirmish broke out on the eve of Gold Fields’ annual meeting when management of the besieged firm will be looking for support of its shareholders to bolster its position. There are no resolutions to be taken about the Harmony offer but Gold Fields board is likely to be questioned about it.
The board is also seeking approval for various bonuses to be paid connected to an alternative merger with Canada’s Iamgold. This might prove controversial.
Harmony shareholders have already voted to support the takeover of its rival but Gold Fields investors have until Friday week to give their approval to Harmony.
The future of Gold Fields became uncertain last month when its management rejected an $8-billion takeover approach from Harmony. The all-share offer, at a near 30% premium to an earlier share price, was dismissed as ”inadequate” by Gold Fields which wants to press ahead with an alternative merger already agreed with Iamgold.
There was speculation early on that the Harmony move might trigger rival bids from other large companies in the industry, such as Newmont or Barrick, but instead it has turned into a bitter fight to convince Gold Fields shareholders they should support Harmony.
Last week Gold Fields failed in the South African high court in an attempt to have the Harmony bid ruled unlawful. Gold Fields had claimed Harmony was trying to coerce its shareholders into accepting the bid.
Gold Fields’ largest shareholder, Norilsk, which owns 20% of the company, supports the Harmony offer but the court ruled that Harmony and Norlisk were not acting in concert.
Gold Fields has also accused Harmony of giving misleading statements on its reserves while Harmony has claimed that Gold Fields advisers JP Morgan made earlier approaches to Harmony about a possible purchase of Gold Fields. Both sides deny each others allegations.
Attempts by Harmony to propel itself to the top of the world league follows its merger in 2003 with ARMgold. Norilsk paid £640-million for its holding in Gold Fields earlier this year. – Guardian Unlimited Â